With the new partnership, Farfetch's retail technology will power the Bergdorf Goodman website and app. The deal brings together two luxury fashion leaders.
Farfetch CEO José Neves and NMG CEO Geoffroy van Raemdonck. (Courtesy photo)
Farfetch is making an investment of up to $200 million in Neiman Marcus Group (NMG) as the two prominent luxury fashion retailers forge a partnership, according to an announcement issued Tuesday.
NMG, which is the parent of Neiman Marcus and Bergdorf Goodman, is set to use proceeds from the minority investment to advance technology and digital capabilities. This will include tapping into the capabilities of Farfetch, which operates a marketplace for luxury fashion products.
In the immediate term, the companies will take the following steps together, according to a news release:
The partnership brings together an iconic name that started with in-person retail in NMG with the digitally native Farfetch. It’s a move with international expansion in mind, and shows how integrating physical and digital retail are becoming key parts of plans for growth. Luxury brands were historically cool to collaboration, but the growth of ecommerce ushered in a change in thinking. Farftech has been at the forefront of the move to form alliances in recent years, both via investment and acquisition.
“I believe the US luxury market is at a pivotal point,” Farfetch CEO José Neves said in a statement. “Whilst the US is proving to be a long-lasting source of growth for the luxury industry, fueled by younger generations who are highly engaged with the category, businesses will have to significantly upgrade their digital capabilities – powering both online and offline customer journeys – to meet these new customer expectations and stay ahead in what is going to be a competitive space in the coming years.”
Neves added that the partnership “is about revolutionizing the luxury landscape globally, both online and offline, by combining NMG’s iconic presence in the US and Farfetch’s Luxury New Retail vision and technology.”
The announcement comes days after Bergdorf Goodman made a pair of key promotions that were in part centered around digital offerings. Cheryl Han was appointed to Senior Vice President of BergdorfGoodman.com and Customer Strategy, while Melissa Xides was named Senior Vice President of Bergdorf Goodman Stores and Brand Operations.
The Farfetch partnership the latest tech-centered move for NMG that comes amid the growth of ecommerce in the pandemic. NMG leaders said in 2021 that the company would invest $500 million in capabilities including upgrading delivery and personalization over the next three years, Vogue Business reported at the time.
With Tuesday's announcement, NMG CEO Geoffroy van Raemdonck called Farfetch “the ideal partner to help us grow Bergdorf Goodman to be an even stronger global digital luxury retailer.”
“Farfetch’s investment demonstrates their confidence in our omnichannel strategy, and we look forward to partnering with Farfetch to continue revolutionizing the luxury customer experience and delivering value to all our stakeholders,” van Raemdonck said in a statement.
The investment and partnership is expected to be completed in the third quarter of 2022.
Still, plans to buy big-ticket items ticked up.
“Deterioration.” “Gloomy.”
Those were a couple of the words used to describe consumer confidence in May. The Conference Board reported that the index fell to a six-month low amid debt ceiling anxiety and increasing concerns about employment.
“Consumer confidence declined in May as consumers’ view of current conditions became somewhat less upbeat while their expectations remained gloomy,” said Ataman Ozyildirim, senior director of economics at the Conference Board, in a statement. “...While consumer confidence has fallen across all age and income categories over the past three months, May’s decline reflects a particularly notable worsening in the outlook among consumers over 55 years of age.”
The dip among those over 55 came as Congress negotiated a deal over increasing the debt ceiling that included talk of cuts to programs such as social security and Medicare. While officials reached an agreement over Memorial Day weekend, the Conference Board’s survey was fielded prior to that date.
The job picture appears to be more anecdotally cloudy, as the number of consumers reporting jobs as “plentiful” fell to four percentage points to 43.5%. The job market has been consistently robust for nearly three years, as unemployment remains near historic lows. In April, the economy added 253,000 jobs, which remained a positive sign despite being below the gains of prior months. The confidence reading comes ahead of fresh data from the U.S. Bureau of Labor Statistics on Friday.
Despite the declines, there were signs that consumers are not completely pulling back on big-ticket items. Plans to buy big-ticket items such as cars and appliances ticked up on a monthly basis. It’s worth watching whether this extends to providing resilience in other discretionary categories, which have seen a pullback in early 2023.
Nevertheless, the index offered another sign that the consumer mood is getting more pessimistic. It was the fourth time in five months that confidence fell. On Friday, the University of Michigan offered another with a consumer sentiment report that showed a 7% dip.
Brands and retailers must work to reach consumers that are increasingly in less of a buying mood than the month before.
